On November 21, 2008, following the passage of the bill in the Senate by voice vote a day earlier, President Bush signed legislation (H.R. 6867) to extend expiring unemployment benefits for workers who have already exhausted their benefits. The bill passed the House on October 3 by a 386-28 vote.

The bill would provide jobless workers who have exhausted their benefits with seven more weeks of benefits, with additional 13-week extensions to workers in the 18 states (and the District of Columbia) with unemployment rates above 6 percent. The bill provides roughly $6 billion for unemployment benefits.

The Bush administration had previously opposed an extension of benefits this fall, has announced its support for the extension in light of mounting job losses. The administration had supported an initial extension of unemployment benefits in June 2008.

On November 24, 2008, the Equal Employment Opportunity Commission (”EEOC”) published its regulatory agenda for the next six months. Two main items are on the agenda.

First, the EEOC will propose regulations implementing the Genetic Information and Nondiscrimination Act (”GINA”). Signed into law on May 21, 2008, GINA prohibits employment discrimination based on genetic information and protects employees against disclosure of such information. Congress included a requirement for the EEOC to issue regulations implementing the Act by May 21, 2009. The Commission intends to issue a notice of proposed rulemaking in January 2009, with the public comment period ending in March 2009. GINA’s employment provisions will take effect in November 2009.

Second, the EEOC intends to revise its regulation on disparate impact under the Age Discrimination in Employment Act (”ADEA”) to conform with the Supreme Court’s holding in Smith v. City of Jackson, 544 U.S. 228 (2005). EEOC’s current regulations interpret the ADEA to prohibit employment practices that have a disparate impact on employees in the protected age group unless the practice is justified by a business necessity. In Smith v. City of Jackson, the Supreme Court held that the appropriate standard for an employer’s defense against a disparate impact claim under the ADEA is not the business necessity test, but whether the employment practice is based on “reasonable factors other than age.” The Commission issued its proposed rule to reflect this standard on March 31, 2008, and the public comment period ended May 31, 2008. The EEOC intends to publish the final rule in May 2009.

The Department of Labor’s Mine Safety and Health Administration (MSHA) has signaled that it might soon be taking a tougher line with repeat offenders of federal mine safety rules. MSHA recently issued its first-ever “pattern of violations” notice to a mine operator as a result of repeated violations of mandatory health and safety standards. This classification exposes mine operators to higher fines and penalties. 

The MSHA administers the provisions of the Federal Mine Safety and Health Act of 1977 (Mine Act) to enforce compliance with mandatory safety and health standards, which are intended to eliminate fatal accidents, reduce the frequency and severity of nonfatal accidents, minimize health hazards, and promote improved safety and health conditions in the nation’s mines. MSHA has jurisdiction over all mining and mineral processing operations in the United States, regardless of size, number of employees, commodity mined, or method of extraction.

Although the “pattern of violations” sanction was authorized in 1978, it was not systematically used until June 2007, when MSHA issued its first letters to mine operators indicating a potential pattern of violations. In order to avoid being found liable for a pattern of violations, each operation had an opportunity to review and comment on the documents upon which the potential pattern of violations was based, and develop and implement a written corrective action plan to reduce significant and substantial (S&S) violations in order to be removed from the potential pattern category. An S&S violation is one that could reasonably be expected to lead to a serious injury or illness. After monitoring the affected mines’ compliance records, the MSHA found that Patriot Mining in Virginia was the only mine that failed to make sufficient improvement.

On November 20, 2008, the Equal Employment Opportunity Commission held a public meeting concerning employment discrimination against persons with criminal histories such as criminal convictions, arrests, and expunged or sealed records. Among the panelists was former EEOC General Counsel Donald R. Livingston, a partner in Akin Gump’s Labor & Employment section. New EEOC guidance on the use of arrest and conviction records has been drafted and is expected to be released soon.

The meeting was part of the Commission’s E-RACE initiative. E-RACE, which stands for Eradicating Racism and Colorism from Employment, is a five-year national program created to identify issues, criteria, and barriers that contribute to race and color discrimination, explore strategies to improve the administrative processing and the litigation of race and color discrimination claims, and enhance public awareness of race and color discrimination in employment.

The Commission focused on the issue of employment discrimination against persons with criminal histories because of a concern that criminal history discrimination serves as a proxy for race or color discrimination. Chair Naomi Earp noted that African American males in particular may disproportionately experience contact with the criminal justice system at some point in their lifetimes, and that employer policies or practices that bar employment of persons with criminal histories are likely to have an adverse impact against this protected class.

Commission guidelines currently state that an applicant may be disqualified from a job on the basis of a previous conviction if the employer takes into account the nature and gravity of the offense or offenses, the time that has passed since the conviction and/or completion of the sentence, and the nature of the job sought. The Commission is considering modifying its guidelines in light of the Third Circuit’s recent decision in El v. Southeastern Pennsylvania Transport Authority, 479 F.3d 232 (3d Cir. 2007), which did not give deference to the EEOC Guidelines because the EEOC had not substantively analyzed the statute in issuing its guidance.

The Commission heard testimony and recommendations from several panelists on the topic of employment discrimination against persons with criminal histories. In addition to Mr. Livingston, the panelists included Devah Pager, Professor of Sociology at Princeton University; B. Diane Williams, President and CEO of the Safer Foundation; Michael L. Foreman, Professor and Director of the Civil Rights Appellate Clinic at Pennsylvania State University Dickinson School of Law; Janet Ginzberg, Senior Staff Attorney with the Employment Law Unit of Community Legal Services; Shawn D. Bushway, Associate Professor of Criminal Justice in the School of Criminal Justice at University of Albany (SUNY); Rae T. Vann, General Counsel of the Equal Employment Advisory Council; and Laura Moskowitz, Staff Attorney at the National Employment Law Project’s Second Chance Labor Project.

A focal point of the discussion became whether the Commission should support a federal bar prohibiting employers from requesting information about a job applicant’s criminal history in the early stages of the hiring process. The push for such a policy, known as the “Ban the box” movement, which references check-box inquiries about criminal convictions on employment applications, began at the state and local level. Proponents are now pushing for this measure on the federal level. The measure would prevent employers from inquiring about an applicant’s criminal history at the beginning of the hiring process. Once an employer has determined that the applicant is a qualified, potential hire, the employer could then ask about prior criminal convictions. Proponents of banning the box contend that by prohibiting questions on conviction history until later in the hiring process, applicants have an opportunity to market their skills to, and build a rapport with, an employer.

The panelists also debated whether the Commission’s policy guidance should be modified to delete the presumption that criminal conviction no-hire policies have a disparate impact. Currently, the Commission’s position is that an employer’s policy of excluding persons from employment based on past convictions has an adverse impact on African-Americans and Hispanics in light of statistics showing that persons in these groups are convicted at a rate disproportionately greater than their representation in the population.

Mr. Livingston took the position that a presumption should not exist based on national and regional conviction rate statistics. He argued that evidence of a disparate impact should be crime specific, and based on the employer’s applicant flow data. As Mr. Livingston noted, the Commission’s guidance already recognizes that a presumption of disparate impact can be defeated if “more narrow data” shows no adverse impact against the protected class. This has been interpreted to mean that disparate impact must be shown with particularity from narrowly drawn data, and that it is not sufficient to presume disparate impact from national or even regional statistics that show that minorities in the overall population are more likely to have criminal histories. Mr. Livingston contended that the burden for proving disparate impact using applicant flow data should be placed on the claimant, and the employer should not have the burden of proving that no adverse impact exists using these more narrowly tailored statistics.

In terms of the risks associated with hiring of ex-offenders, both Mr. Livingston and Ms. Vann asserted that employers in certain industries may face significant liabilities imposed under both state and federal laws for hiring ex-offenders. Mr. Livingston likened the legal restrictions, moral considerations, and potential hazards that employers face when ex-offenders seek employment to a “legal minefield.” Citing recent cases, he argued that the potential for employer exposure to tort liability if ex-offenders are present in the workplace is great. Mr. Livingston emphasized that he was not advocating blanket policies that would prohibit all ex-offenders from being hired. He argued that any regulations promulgated by the Commission should provide employers with flexibility to satisfy their legal and moral obligations with respect to customers, employees, coworkers, the public at large, and the protection of company assets.

Commissioner Ishamaru asked the panelists to recommend a standard they believe employers should use when considering the risks associated with hiring persons with criminal histories. Ms. Ginzberg stated that employers should use a balancing test that weighs the nature of the conviction, the amount of time that has passed since the conviction, the applicant’s post conviction work history, and any rehabilitation that the applicant has underwent since the conviction. Mr. Foreman argued that employers must develop a test that assesses the “riskiness” of ex-offenders. He cited the El decision and argued that employers must adopt a standard that accurately distinguishes between applicants that pose an unacceptable level of risk and those that do not. Ms. Moskowitz recommended that employers should not consider convictions older than seven years, nor “minor” offenses, and suggested that employers take into account the age of the ex-offender at the time the crime was committed.

Another important issue that was discussed is whether employer can have bright line policies, such as refusing to hire anyone as a cashier who has a felony conviction for theft within the last ten years, or whether each application must be subject to a type of “totality of the circumstances” review. Mr. Livingston urged the Commission when crafting its guidance “not seek to forbid rules that are designed to guarantee equal treatment” by tying “the job-relatedness of specific crimes or subcategories of crimes to specific jobs, using the three criteria identified by the EEOC: nature and gravity of the offense, time since conviction or completion of sentence, and nature of the job held or sought.” Mr. Livingston noted that, for example, he believed that it would be unwarranted “to conclude that a bright-line rule that prohibits recent embezzlers (e.g. within the last ten years) from working as bank tellers is not job-related because the employer did not conduct an extensive individualized assessment of the embezzler-applicants.”

There was general agreement that employment discrimination against persons with criminal histories is a serious societal issue. Commissioner Ishamaru noted at the beginning of the meeting that helping ex-offenders obtain meaningful employment is not an issue that falls on “one side of the political aisle.”

By voice vote on November 20, 2008, the Senate approved legislation (H.R. 6867) to extend expiring unemployment benefits for workers who have already exhausted their benefits. The bill, passed the House on October 3 by a 386-28 vote.

The bill would provide jobless workers who have exhausted their benefits with seven more weeks of benefits, with additional 13-week extensions to workers in the 18 states (and the District of Columbia) with unemployment rates above 6 percent. The bill provides roughly $6 billion for unemployment benefits.

Senate Democrats initially sought to package the unemployment benefit extension with a $25 billion bailout for the ailing “Big 3″ U.S. automakers (S. 3688), but Senate Republicans rejected that approach.

The Bush administration, which had previously opposed an extension of benefits this fall, has announced its support for the extension in light of mounting job losses. President Bush previously supported the first extension of unemployment benefits, which he signed into law on June 30, 2008.

On November 17, 2008, the Department of Labor’s Wage and Hour Division (WHD) published its final rule for the Family and Medical Leave Act (FMLA). Enacted in 1993, the FMLA provides that covered employers must grant eligible employees up to 12 weeks of unpaid leave within a 12-month period for the birth and care of a newborn child, the adoption of a child, the care of an immediate family member with a serious health condition or medical leave when the employee himself or herself is unable to work due to a serious health condition. In addition to reorganizing the prior FMLA rule to make it clearer, the final rule makes several substantive changes, including (1) incorporating the National Defense Authorization Act of 2008 (NDAA), which had extended the FMLA to allow leave in certain circumstances to care for a family member who has served in the Armed Forces, and (2) revising other provisions of the FMLA rule to reflect criticisms and comments in the FMLA’s application.

Incorporating the NDAA

The NDAA amended the FMLA to allow for greater care for injured service members of the Armed Services. The NDAA provides that the new leave policies would apply to an employee who is the “spouse, son, daughter, parent, or next of kin of a covered service member.”  While the existing FMLA definition of son or daughter only includes minors under 18 years of age and adults who are incapable of self-care, the final rule applies a more expansive definition of “son or daughter” in determining eligibility to care for covered service members.

The NDAA authorizes two major grants of leave.  First, employers must grant employees up to 12 weeks of leave for certain qualifying exigencies arising out of a covered military member’s active duty status, notification of an impending call, or order to active duty status. Second, employers must grant employees up to 26 weeks of leave in a single 12-month period to care for a covered service member recovering from a “serious injury or illness” incurred in the line of duty on active duty. “Serious injury or illness” includes conditions where the service member is “(1) undergoing medical treatment, recuperation, or therapy; or (2) otherwise in outpatient status; or (3) otherwise on the temporary disability retired list.” 

Revising the FMLA

The final FMLA rule largely tracks the proposed rulemaking issued in February 2008. For a more detailed discussion of how the new rule changes the operation of the FMLA, please see our March 10, 2008 analysis of the proposed rule. In short, the final rule confirmed a number of changes in the proposed rulemaking:

▪           Joint Employer Coverage. Professional Employer Organizations (PEOs) that perform merely administrative functions (like managing payroll or benefits) are not joint employers.

▪           “Serious Health Condition.” While there was no change to the substantive “serious health condition” definition, the new rule now requires employees claiming “chronic illnesses” to visit a health care provider twice in a year and employees claiming incapacity to visit a health care provide twice within 30 days of the incapacity.

▪           Primary Worksite.  For employees who physically work at one location but whose primary employer assigns work from a different site, the primary employer’s location remains the primary worksite for one year. Only after a year of physically working at the remote site will the remote site become an employee’s primary worksite.  

▪           Scheduling Intermittent Leave. Employees seeking intermittent leave must make a “reasonable effort” to schedule leave so as not to unduly disrupt an employers’ operations.

▪           Substitution of Paid Leave. Employers are not required to permit employees to substitute their paid leave for unpaid FMLA leave if that substitution would be inconsistent with employers’ policies for paid leave (e.g., advance notice requirements, etc.).

▪           Holidays. If a holiday falls within a partial week of FMLA leave, then the holiday is not counted against an employee’s FMLA leave, unless the employee would otherwise have been required to work on the holiday. If the holiday falls within a full week of FMLA leave, then the holiday has no effect and the week is counted as a week of FMLA leave. 

▪           Bonuses. Employers can disqualify employees from achievement bonuses if employees fail to make a goal because of FMLA leave, so long as employees on other forms of leave are treated in the same way.

▪           Employer Notice Requirements. Employers must provide notice that leave is designated FMLA leave within five days after employees provide notice of leave. Employers can retroactively designate leave as FMLA leave if such a designation “does not cause harm or injury” to the employee.

▪           Employee Notice Requirements. An employee must give at least 30 days’ advanced notice for foreseeable leave. For unforeseeable leave, employees must give notice “as soon as practicable,” which is defined to mean “as soon as both possible and practical, taking into account all of the facts and circumstances in the individual case.”

▪           Medical Certification. While health care providers still cannot disclose an employee’s medical information without his or her consent, employers can use an employee’s refusal to provide consent as grounds to question a certification. Employers can require annual medical certification when the serious health condition extends for more than one year.

▪           Restructuring the FMLA Rule. Various provisions have been reorganized to improve readability. For example, several provisions implicating pregnancy have been collected into the new § 825.120 and the provisions implicating FMLA rights with regard to adoption or foster care have been consolidated into the new § 825.121.

The Department of Labor’s Wage and Hour Division (WHD) recently published seven opinion letters offering guidance on the proper application of the Fair Labor Standards Act (FLSA). The opinion letters addressed three main subject matters: (1) the proper calculation of an employee’s regular rate for on-call and commissioned employees, (2) the application of the FLSA in non-profit situation, and (3) the application of the teaching exemption in several contexts. The two regular rate opinion letters are discussed in greater detail below.    

The FLSA requires that overtime compensation be paid at a rate of not less than one and one-half times the regular rate of pay for all hours worked in excess of 40 in a workweek. See 29 C.F.R. Part 778. The regular rate of pay of an employee “is determined by dividing his total remuneration for employment (except statutory exclusions) in any workweek by the total number of hours actually worked by him in that workweek.” 29 C.F.R. § 778.108.

The first WHD opinion letter deals with how to calculate the regular rate for an employee who was paid $2.50 an hour for on-call time as per the company’s collective bargaining agreement. During a two-week pay period, employees worked one week on-call and one week not on-call. The employer wanted to see whether compensation for on-call time in a specific week could be averaged over a two-week period. The WHD determined that averaging was not a lawful practice because the “FLSA takes the single workweek as its standard and does not permit the averaging of hours over two or more weeks whether the employee is paid on a daily, weekly, biweekly, monthly, or other basis.” If an employee worked overtime during a week when that employee was on-call, then the employee must be paid one and one-half times the sum of his normal salary and his on-call pay.

The second WHD opinion letter addressed how employees working for commissions should be paid overtime. An employer paid truck drivers a commission of 27 percent of the gross revenue received by the employer for the materials delivered by the driver each week. At the end of each workweek, the employer divided the commission amount by the total number of hours worked to determine each truck driver’s regular rate of pay. The WHD found that this was the proper way to compensate commissioned employees. See 29 C.F.R. § 778.118.

The other five opinion letters concerning non-profits and the teaching exemption are available for review on the WHD Web site, located at:  http://www.dol.gov/esa/whd/opinion/opinion.htm.

On November 14, 2008, the Department of Defense, General Services Administration, and National Aeronautics and Space Administration issued a rule requiring federal contractors to use E-Verify to ensure their employees are authorized to work in the United States. E-Verify is an internet-based system administered by the Department of Homeland Security’s U.S. Citizenship and Immigration Services, in partnership with the Social Security Administration, that allows employers to verify employees’ work eligibility.The rule, which will take effect January 15, 2009, amends the Federal Acquisition Regulation to insert a clause into federal government contracts committing contractors to use E-Verify. Agencies must also amend, on a bilateral basis, any existing indefinite-delivery/indefinite quantity contracts to include the clause for future orders if the remaining period of performance extends at least six months after the effective date of the final rule. Contractors must verify all new hires, regardless of whether they are working under federal contract, and any current employee working under federal contract. The rule applies to all contracts lasting longer than 120 days and valued over $100,000, as well as any subcontracts over $3,000 for services or construction. Contracts for commercially available off-the-shelf items are exempted.

To be eligible to use E-Verify, employers must enroll in the program within 30 days of the contract and must agree to the E-Verify Memorandum of Understanding, which commits the employer to abiding by current legal hiring standards and to ensure that no employee will be discriminated against through the use of E-Verify. A violation of the Memorandum of Understanding could result in termination from participation in the program.

The rule goes into effect despite overwhelming opposition during the public comment period questioning the effectiveness, legality, and cost of the requirement. A June 2008 Government Accountability Office (”GAO”) study pointed out that while E-Verify can detect the use of fraudulent documents, it does not protect against identify fraud, such as when employees use stolen documents. The GAO study also noted that most erroneous tentative nonconfirmations of an employee’s eligibility occur because information such as name changes and citizenship status has not been updated in the databases.

On October 29, 2008, NLRB General Counsel Ronald Meisburg issued his annual fiscal year report summarizing the Board’s operations for fiscal year 2008. The memorandum described the Board’s overall performance for the year, and discussed whether the Board had met or surpassed internal goals set in the previous year.

Of particular interest, the General Counsel released statistics showing the impact of the Board’s September 2007 Dana Corp. decision. In Dana Corp., 351 NLRB No. 28 (2007), the Board modified its existing “recognition-bar” doctrine, which barred an election petition filed by an employee or a rival union for a reasonable period of time after an employer’s voluntary recognition of a union.  Attempting to strike a balance between protecting employees’ freedom of choice and promoting the stability of bargaining relationships, the Board amended the rule to impose a notice requirement and a 45-day period in which employees may petition for decertification of the recognized union or support the filing of a petition by a rival union. After the 45-day period, the recognition bar applies. Any collective-bargaining agreement executed on or after the date of voluntary recognition will not bar a decertification or rival union petition unless notice of recognition has been given and forty-five days have passed without a valid petition being filed.

During fiscal year 2008, the Board received 419 requests for Dana notification. In five of these matters, a petition for certification was filed after notices to employees were posted. In twenty-six of these matters, a petition for decertification was filed after the notices were posted.

The General Counsel praised the Board’s performance overall, observing that regional offices won 90.8% of Board and Administrative Law Judge unfair labor practice decisions, and recovered over $70 million in backpay and other fees on behalf of claimants. The General Counsel also noted that case intake increased this year by 1.6% over last year, and more unfair labor practices cases were filed with the Board than in 2007.

On October 3, 2008, the NLRB’s General Counsel issued a new Guideline Memorandum discussing his burden of production under St. George Warehouse, 351 NLRB No. 42 (2007), a September 2007 Board decision that increases the likelihood that an employee’s mitigation efforts will become a major focus of litigation in Board compliance proceedings. The memorandum discussed ways in which regional offices should prepare to litigate mitigation issues. 

In St. George Warehouse, the Board determined that the General Counsel shared the burden of production on the issue of whether an employee mitigated losses by seeking other employment. Prior to St. George Warehouse, the employer bore the entire burden of production and persuasion on the mitigation defense. The St. George Warehouse decision clarified that the employer bears the ultimate burden of proving that an employee failed to mitigate losses, but shifted a portion of the burden of production to the General Counsel. While the employer must still produce evidence showing that equivalent jobs were available during the backpay period in the relevant geographic area, the General Counsel must produce evidence showing that the employee took reasonable steps to seek those available jobs.

To comply with his burden of producing evidence that an employee mitigated losses, the General Counsel advised the Board’s regional offices to investigate thoroughly whether an employee has conducted a reasonable search for work. This includes adducing evidence that the employee has, for example, registered with state or private employment services, checked newspaper and internet advertisements, visited employers, and sought leads from friends and relatives on available employment. The General Counsel suggested that regional offices have employees keep written documentation of their efforts to seek employment so that a detailed record would be available.

In addition, the General Counsel advised that regional offices seek to discredit evidence of equivalent jobs that may be presented by an employer. Specifically, he recommended that regional offices argue (when applicable) that the evidence offered by the employer does not reliably establish either that available jobs were substantially equivalent or that the particular employee could have obtained those jobs. Differences in location, type of work, rate of pay, and other working conditions should be emphasized to rebut the employer’s evidence.